Global bioinformatics market forecast to hit $6 billion by 2010

NEW YORK—The global bioinformatics market totaled roughly $3 billion in 2004 and could be as high as $6 billion by the end of the decade. This, according to the recently-released research report "The U.S. Bioinformatics Market" from TriMark Publications, LLC, based here.

According to the report, the prospects for the bioinformatics market are closely tied to the fortunes of the biotech market. Of the $31 billion in equity investment made by biotech companies last year, TriMark estimates that roughly 10 percent of that spending was for informatics hardware, systems, software and services. Considering that the global biotech market is growing at roughly 25 percent annually, prospects for established bioinformatics providers are good. Yet, despite the expected robust growth rate, total spending for bioinformatics is not expected grow beyond 10 percent per annum, the report notes, meaning that for all the noise, bioinformatics should remain a niche industry for the foreseeable future.

Bioinformatics, as a science, is still evolving, with many of the algorithms and underlying mathematics that make it work still in development. As such, companies wishing to remain competitive in the life science informatics market space will not be able to offer "standardized" service. Instead, staying competitive will mean creating value through intellectual property and by contributing to the wider bioinformatics knowledge base.

The report also suggests that the bioinformatics business model has "great potential." Much of this potential is derived from the ever-increasing costs faced by pharmaceutical companies to discover and bring to market a new drug – a cost that is currently estimated at more than $1 billion. With much of this cost attributed to high attrition rates of promising new drug candidates, bioinformatics can play a role in the screening process to catch these failures earlier in the process. An effective application of bioinformatics throughout the discovery process can save a pharmaceutical company as much as 20 percent of the total cost to market, the report estimates.

Another conclusion states that the structure of the pharmaceutical industry itself and the relationships between pharmaceutical companies and informatics vendors preclude price competition. Rather, success in bioinformatics comes from developing close ties with major pharmaceutical customers. Without these ties, fledgling bioinformatics providers will find it hard to become competitive in the market. One reason for this is that pharma companies closely guard their information and, as the report notes, "the industry is highly sensitive about IPR issues."

The offshore model for providing bioinformatics to major pharma may also face some stumbling blocks for the same reason: until a pharmaceutical company trusts its bioinformatics provider it is usually unwilling to allow the data to be moved off-site. Some in the industry, however expect reluctance to use off-shore companies will ease somewhat after the end of this year, when India becomes an accessory to the WTO IPR norms.